The crypto market came to life this week as Bitcoin (BTC -1.67%) passed $52,000 and the $1 trillion market cap level. As of noon ET on Friday, Bitcoin is up 10.2% over the past seven days and is holding strong.
Bitcoin isn't the only winner in crypto. Ethereum (ETH -1.72%) is up 12.2% to $2,784 per token and high-throughput blockchain Solana (SOL -2.78%) is up 4.7%, although it was up over 10% for the week just a few hours ago.
CRYPTO: BTC
Key Data Points
What's driving the crypto market
The simple driver of crypto right now is the flow of funds into the industry. BlackRock's iShares Bitcoin Trust has seen hundreds of millions of dollars of inflows this week alone and now holds over 100,000 Bitcoins. That's enough to inflate the entire market.
Bitcoin's rise is particularly interesting given competing forces in the market. A strong U.S. dollar and rising interest rates have typically correlated to Bitcoin declining, but that trend is being offset by tech and growth stocks rising, which Bitcoin is directly correlated with.
Traders have speculated that Bitcoin has become a safe haven for international investors or there's an increased pool of buyers because of new Bitcoin exchange-traded funds (ETFs), but the reality is money is coming into Bitcoin at a much faster pace than it's going out and that's driving the price.
CRYPTO: SOL
Key Data Points
Ethereum and Solana keep up
Ethereum is up in part because traders are expecting it to be the next crypto ETF. That would be the natural next step, although the Securities and Exchange Commission (SEC) hasn't said it will allow any ETFs beyond Bitcoin's.
Solana could be another ETF candidate, but it's up in part because of airdrops in the ecosystem that has brought more liquidity and value, some of which is flowing back to the Solana token.
It's not unusual for tokens like Ethereum and Solana to climb alongside Bitcoin and that's at least one of the drivers of the tokens this week.
What's ahead for crypto?
Outside of just token values rising, Coinbase Global's earnings release this week showed optimism about crypto exchanges and also crypto use cases. Coinbase is seeing more adoption among institutions and developers and is also pushing for regulatory clarity about what's a security and what isn't in crypto.
As the industry leader in the U.S., Coinbase's position and activism are very important to the crypto industry and when it's reporting healthy financial results that bodes well for the industry.
I think all of these factors working together are very bullish for cryptocurrencies in general and even exchanges and development companies like Coinbase. But it'll be a bumpy ride and the gains earned this week could evaporate next week. So, prepare for the volatility ahead -- any dips could be a buying opportunity for investors.
